Indian Workers Demand Greater Rewards

By Amy Kazmin
New Delhi Financial Times 
October 24, 2011

http://www.ft.com/intl/cms/s/0/8c5d92f2-fbd0-11e0-9283-00144feab49a.html#axzz1bpjxlhmr

Maruti Suzuki, the Indian subsidiary of Japan's Suzuki, has
been India's biggest carmaker for two-and-a-half decades. But
this year, its position as India's market leader - and as a
major driver of Suzuki's profits - has been undermined by
labour unrest that has severely disrupted production and led
to long waiting periods for Maruti's most popular models.

Since June, workers at the company's five-year-old Manesar
plant, in the northern state of Haryana, have gone on strike
three times, initially to press for a new, independent union,
and later against management's punitive moves against strike
leaders. Tensions culminated this month, when 1,500 workers
occupied the factory compound for eight days, halting
production completely, until they were evicted by police.

Maruti said on Friday that it had finally resolved its
differences with the workers after days of intensive talks
brokered by the state government, and that normal production
would resume. But labour activists say it is likely to be a
fragile peace.

"How long this truce will last is going to depend on
management," says Gautam Mody, secretary of the New Trade
Union Initiative, which has closely followed the agitation.
"They need to change their style in being able to accept a
union of the workers' choice and not trying to dictate terms
of how industrial relations will work."

The unrest at Maruti reflects the increasingly combative mood
among Indian industrial workers , who toil in highly-
automated, ultra-modern factories - often owned by, or
supplying to, foreign companies - but feel they are not
getting an adequate share of India's rising prosperity.

Prabhu Mohapatra, a Delhi University labour historian, says
the agitation at Maruti had similar causes as the labour
unrest that has rocked many foreign-owned factories in China
in the past few years.

"Auto component companies have made enormous profits, and
workers have gotten peanuts," he said. "How many months would
it take a worker at the Manesar plant to buy a Maruti,
compared to a German worker? The difference is 20 times."

"You have to increase the purchasing power of workers to
create a mass market, but here, you think `we will squeeze
these workers so we can export'," he added.

Overall, labour unrest in India has declined sharply since
the 1970s, when up to 40m days were lost a year in protracted
national strikes led by fiery union leaders. National unions,
mostly linked to political parties - have lost their clout,
and there are now virtually no national, industry-specific
unions.

But India has seen a rising tide of factory-level industrial
action at multinational companies. Companies such as mobile
phone maker Nokia , engineering firm Bosch, Hyundai, Honda
Motorcycles, auto components- maker Comstar, tyre-maker MRF,
General Motors and Nestlé, the food group, have all suffered
disruptions in recent years.

As it did at Maruti, trouble has often begun with workers'
efforts - encouraged by outside labour activists, or
politicians - to organise new, more independent unions to
represent them. Typically, these moves are fiercely resisted
by companies long accustomed to dealing with compliant,
management- influenced unions.

At Maruti - where the official union had not held elections
to its governing board for at least eight years before the
trouble at Manesar erupted, executives were firm in their
rejection of a demand for a new union, with three non-
employees on the board even though labour groups' rights are
protected under India's liberal constitution.

"Management was clear we can't have non-employees," a company
spokesman told the FT. "A non-employee will never have the
interests of the company at stake."

Across India, labour unrest has also been fuelled by the
widespread use of short-term contract workers, who are hired
by labour agents - a practice many leading companies use to
skirt stringent domestic labour laws that make it virtually
impossible to lay off permanent workers if times turn hard.

The recent unrest has cost Maruti dear. The three strikes -
which together lasted 64 days - resulted in a loss of
production of around 65,000 cars, with an estimated market
value of around $400m.

Its share of India's passenger car market fell to 40 per cent
in September, down from 48 per cent in June when the trouble
began. It still has a huge waiting list of nearly 100,000
people wanting its newest model.

But Mr Mody warns other companies could be looking at similar
woes, with the real prospect of rising labour agitation in
the future, unless they radically change their hiring
practices. "There is an enormous sense of exploitation and a
strong anger," he says. "The situation is increasingly
intolerable."

Copyright The Financial Times Limited 201

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